We apply stochastic stability to study the evolution of bidding behavior in private-values second-price, first-price and k-double auctions. The learning process has a strong component of inertia but with a small probability, the bids are modified in the direction of ex-post regrets. We identify...

We consider mechanism design in contexts in which agents exhibit bounded depth of reasoning (level k) instead of rational expectations. We use simple direct mechanisms, in which agents report only first-order beliefs. While level 0 agents are assumed to be truth tellers, level k agents...

We consider the regret matching process with finite memory. For general games in normal form, it is shown that any recurrent class of the dynamics must be such that the action profiles that appear in it constitute a closed set under the “same or better reply” correspondence (CUSOBR set) that...

In contexts in which players have no priors, we analyze a learning pro- cess based on ex-post regret as a guide to understand how to play games of incomplete information under private values. The conclusions depend on whether players interact within a fixed set (fixed matching) or they are ran-...

In contexts in which players have no priors, we analyze a heuristic process based on ex-post regret as a guide to understand how to play games of incomplete information under private values. The conclusions depend on whether players interact within a fixed set (fixed matching) or they are...

When information is hardly available, the role of priors should be limited in robust game-theoretic predictions. We analyze a process of heuristics based on ex-post regret as a guide to understand how to play games of incomplete information with private values. While our dynamics has a strong...

We consider the regret matching process with finite memory. For general games in normal form, it is shown that any recurrent class of the dynamics must be such that the action profiles that appear in it constitute a closed set under the 'same or better reply' correspondence (CUSOBR set) that...

We apply stochastic stability to study the evolution of bidding behavior in private-values second-price, first-price and k-double auctions. The learning process has a strong component of inertia but with a small probability, the bids are modified in the direction of ex-post regrets. We identify...

Models of choice where agents see others as less sophisticated than themselves have significantly different, sometimes more accurate, predictions in games than does Nash equilibrium. When it comes to mechanism design, however, they turn out to have surprisingly similar implications. This paper...